Seasonal Electricity Demand in the Southeast
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JOHN D. WILSON, MAGGIE SHOBER JOHN D. WILSON Research Director Resource Insight, Inc. MAGGIE SHOBER Director of Utility Reform Southern Alliance for Clean Energy 1 The Southeast is widely perceived as a summer peaking region, though many of its utilities experience winter peak events. This analysis summarizes trends in seasonal demand peaks using data from 1999 through 2018 and provides commentary on how this analysis may or may not inform utility load forecasting and resource planning moving forward. Even though the Southeast peaks in both summer and winter, the summer season likely remains the most constrained in terms of generation resources. From a Southeastern regional perspective, six important trends can be observed. • The Southeast’s peak electric load has shifted from a period of growth to decline. • The Southeast is now a dual peaking region due to declining summer peaks. • Even though the Southeast is a dual peaking region, the vast majority of peak hours occur during the summer. • Winter peak variability is higher than summer peak variability, but there is no evidence of an increase or decrease to seasonal peak variability. • Southeastern utilities appear to have adjusted forecast methods to reflect a weaker relationship between economic growth and load growth. • Southeastern utilities are still overestimating future peak demand for electricity. While there are many individual utility trends, several key differences from the regional perspective can be observed in these data. • While the Southeast region is in a period of peak load decline, it is not easy to discern a clear trend in individual utility peak loads. Year-to-year weather fluctuations may mask a trend. • Utility trends are, however, evident in electric power consumption. Some utilities have experienced growth at rates that may exceed 2% annually. In contrast, some other utilities have experienced declining loads. • The Southeast is a dual peak region, and utility systems are evenly balanced between winter and summer peaking systems. Eight appear to be winter peaking, six appear to be dual peaking, and eight appear to be summer peaking. Winter peaks are more common in recent years than in the earlier years of our 20-year analysis. • Winter peaks at all utilities are less frequent than summer peaks. • Summer peak events tend to be of similar length (on average, under 5 hours) and have a similar load shape, although a few utilities tend to have longer duration peak events of up to 12 hours. • For most utilities, winter peaks are of shorter duration than summer peaks. However, the most strongly winter peaking systems also have occasional long duration peak events of 14 hours or more and occasionally more than 20 hours. 2 • Utilities vary in the degree of coincidence with the overall regional peak. Several large utilities are closely associated with regional peak events, but others tend to be more seasonal in their association. Peninsular Florida utilities require special consideration due to the pattern of coincidence and the limitations on transmission connections to the rest of the Southeast. Utility planning for resource acquisition and independent power development are important activities that determine the cost and reliability of power in the Southeast. Forecasts for peak demand play a key role in this utility planning process. It is surprising just how steady seasonal peak demand characteristics have been over the past 20 years, even while there have been notable shifts from growth to flat or declining annual energy consumption. For example, summer and winter peak durations appear similar now to two decades ago. The reliability risks to power and transmission resources are associated not only with demand during the largest peak event, but with the number of hours that a system is at or near peak demand. There are about 20 times as many summer peak hours than winter peak hours, thus the cumulative reliability risk associated with thermal power plant failures is likely higher in the summer season as a whole for all (or nearly all) utilities in the Southeast. There does not seem to be support in the data for suggestions by some utility planners that reliability risk is increasing in the winter due to increasing variability in winter peaks. Utility load data do not demonstrate a clear trend towards increases in winter peaks, either at the regional level or at the individual utility level. Some utility planners have also assigned reliability risk to an increased reliance on solar power. Although solar power’s generation profile is poorly aligned with winter peaks, other resources may be more reliably available. For these reasons, reliability risk in the winter may not be increasing as much as has been implied. The fact that Southeast regional trends are not shared among all utility systems is a significant finding in and of itself. Seasonal peaks are variable across utility systems in the Southeast and do not appear to follow trends related solely to climate, technology, or other demographics. Utility planners and regulators should consider the context provided by regional data, should apply a high degree of scrutiny to trends that may initially appear significant, and avoid being misled by statistically insignificant trends. 3 EXECUTIVE SUMMARY ............................................................................................................. 1 SOUTHEASTERN REGIONAL ELECTRIC DEMAND TRENDS .................................... 1 UTILITY ELECTRIC DEMAND TRENDS ............................................................................ 1 COMMENTARY .................................................................................................................... 2 INTRODUCTION .......................................................................................................................... 4 BACKGROUND AND METHOD OF ANALYSIS .................................................................. 6 SOUTHEASTERN REGIONAL ELECTRIC DEMAND FI NDINGS ....................................... 8 SOUTHEASTERN UTILITY ELECTRIC DEMAND FINDINGS ............................................. 12 COMMENTARY ......................................................................................................................... 25 WHAT NEXT? ............................................................................................................................. 28 ACKNOWLEDGEMENTS ......................................................................................................... 28 4 The Southeast is widely perceived as a summer peaking region, though many of its utilities experience winter peak events. Due to high use of electricity for space heating, residential and small commercial resistance heating loads, including backup heating installed in heat pump units, often drive these winter peak events. Understanding where winter peak events may occur, and identifying energy efficiency, demand response, and distributed energy resource solutions may help address these issues. Peak demand is important to electric utilities and their regulators because high levels of demand are associated with greater system reliability risks and thus drive investment in power plants, transmission, and (to a lesser extent) distribution systems. If anticipated seasonal peaks are in the summer, winter, or potentially either season, then utility investment decisions will focus on resources that perform in its peak demand season. Utilities often describe the planning process around being winter, summer, or dual peaking, but there is no single regulatory filing in which utilities declare a season, nor is there a widely accepted method for making such a determination. If a utility’s anticipated weather-normalized peak1 for the summer exceeds that for the winter, then it could be a summer peaking utility. But what if a utility anticipates that in a median year it will be summer peaking, but in an extreme-weather year it is highly likely to be winter peaking? In order to look at both “normal” and “extreme” weather years, in Table 1, we classify utilities as winter, dual, or summer peaking using three measures: winter peak hours, winter peak events, and a seven-year winter-to-summer peak ratio. The classification order reflects an aggregated measure, but the measure is somewhat arbitrary and thus the specific ranking should not be closely relied upon. 1 A forecast, weather-normalized peak is essentially the median peak, i.e., the actual peak is equally likely to exceed or fall short of the forecast. 5 TABLE 1: SEASONAL ELECTRIC DEMAND TENDENCIES OF SOUTHEASTERN UTILITY SYSTEMS WINTER PEAKING DUAL PEAKING SUMMER PEAKING /TRANSITIONAL • PowerSouth Energy • Tampa Electric Cooperative • Duke Energy Florida • Florida Municipal Power • Santee Cooper • Gulf Power Agency (FMPA), including • Seminole Electric • Alabama Power City of Homestead Cooperative • Duke Energy Carolinas • Oglethorpe Power • Duke Energy Progress, • Dominion Energy South • Georgia Power, including including Greenville Utilities Carolina (DESC) Southern Power Commission • City of Tallahassee • Municipal Electric Authority • Tennessee Valley Authority of Georgia (MEAG) (TVA) • Gainesville Regional Utilities • JEA (GRU) • Mississippi Power • Orlando Utilities Commission • Lakeland Electric (OUC), including City of St. Cloud • Florida Power & Light (FPL) The Southeast region as a whole appears to be a dual peaking region. This conclusion is based on regional coincident peak data, using aggregated hourly load data